NYC Affordability

The problem a CEMA solves

New York charges mortgage recording tax (MRT) whenever a mortgage is recorded against real property. On an NYC residential loan, the borrower typically pays about 1.80% of the loan amount under $500,000 and 1.925% at $500,000 or more. (The full statutory rate is higher, 2.05% / 2.175%, but lenders typically cover a 0.25% portion on residential loans.)

The tax is owed on the full amount of each new mortgage. So if you refinance a $600,000 balance the ordinary way, paying off the old loan and recording a brand-new one, you pay MRT on the whole $600,000 again, even though you already paid it once when you bought.

How a CEMA works

A Consolidation, Extension and Modification Agreement doesn’t extinguish the existing mortgage. Instead:

1. The existing mortgage is assigned to the new lender, or kept by the same lender, rather than satisfied.
2. Any new borrowing is recorded as a separate “gap” mortgage for just the additional amount.
3. The old mortgage and the gap mortgage are consolidated into one loan, with the new rate and term, by the CEMA document itself.

Because MRT was already paid on the existing mortgage when it was first recorded, only the gap mortgage — the new money — is taxed.

Refinance CEMA vs. purchase CEMA

• Refinance CEMA is the common case. You’re refinancing your own mortgage, and your current lender assigns it to the new lender. Most NYC lenders are set up to do this.
• Purchase CEMA (sometimes called a “splitter”) is less common. As a buyer, you take an assignment of the seller’s existing mortgage and consolidate it with your own new loan, so you pay MRT only on the amount above the seller’s unpaid balance. It needs the seller, the seller’s lender, and your lender all to cooperate, and sellers commonly ask the buyer to cover their added legal costs. Some new-development sponsors offer it on their construction financing.

Co-ops are out of scope entirely. A co-op loan is a share loan on personal property, not a recorded mortgage, so there’s no MRT to save in the first place (see co-op vs condo costs).

Worked example: a condo refinance

Say you owe $600,000 on your condo and refinance into a new $700,000 loan, taking $100,000 of cash out.

	Ordinary refinance	CEMA refinance
Amount subject to MRT	$700,000	$100,000 (new money only)
MRT rate	1.925%	1.80% (gap under $500K)
Mortgage recording tax	$13,475	$1,800

That’s about $11,700 saved. If you refinance with no cash out, keeping the balance at $600,000, there’s no new money at all, and the CEMA can eliminate the recording tax entirely. How the rate tier applies to a gap mortgage can vary with deal structure, so confirm the exact calculation with your closing attorney.

What a CEMA costs

A CEMA isn’t free. Expect some mix of:

• Lender CEMA/processing fees and a fee from your existing lender to assign the loan and release the original note, commonly several hundred to a couple thousand dollars combined.
• Additional attorney fees, since there are more documents to draft, review, and record.
• Extra recording fees for the assignment and consolidation documents.
• Time. Collecting the original loan documents from the existing lender can add weeks to a closing.

Total CEMA costs commonly run $1,500 to $3,000 or more. On a small balance that can wipe out the savings. The rough test: multiply the existing balance you’d carry over by ~1.8%–1.925%. If that’s well above the quoted CEMA costs, it’s worth it.

When to ask about it

• Every NYC refinance on a condo, house, or townhouse. Ask your lender up front whether they do CEMAs and what they charge. Not every lender does, and some price them less favorably.
• Buying a resale condo or house where the seller has a large remaining mortgage. Ask your attorney whether a purchase CEMA is realistic. The bigger the seller’s balance, the bigger the potential savings, and the more reason the seller’s side has to cooperate.
• New development purchases. Ask whether the sponsor offers a CEMA structure, and whether it’s reflected in the offering plan’s closing cost estimates. See our closing costs guide for where MRT sits among the other line items.

With mortgage rates moving around 7% in September 2026 (see how rates change what you can afford), CEMA matters most for the refinance you might do later, if rates fall. It’s a big reason refinancing in NYC is cheaper than the headline recording-tax rate suggests.